IT’S WELL INTO HARVEST time in the cranberry bogs of Massachusetts, and Ocean Spray’s marketing staff is still working overtime.
Ocean Spray is working to forge something valuable out of the swamp it’s been mired in for a year as sales fell and grocers grumbled. Its recipe for rebound starts with a marketing budget boost to $60 million, including $35 million to $40 million earmarked for consumer promotion that targets two distinct audiences, at-home and away-from-home consumers.
This year the company has revamped its marketing staff, redoubled its new-product and category management efforts, and reassured grocers that the No. 1 cranberry brand can grow the $4.75 billion shelf-stable juice business. Along the way, it discovered that 13-year-olds drink juice. That sets the tone for distribution and promotion for the fiscal year begun Sept. 1, as Ocean Spray executes its segmentation strategy: Talk differently to consumers.
“Five years ago we’d define an all-family beverage as Mom buying a big bottle for the whole family to drink at home,” says exec vp-chief operating of1/2cer Kevin Murphy. “Today we define it as each family member buying different products outside the home – like 13-year-olds who get off the school bus and hit the convenience store on the way home.”
That wholesale $350 million away-from-home business is as crucial to Ocean Spray’s growth as re-energizing its $900 million retail business, its traditional at-home consumers.
Ocean Spray sales in food, drug, and mass-merchandise stores fell 10 percent to $467 million for 52 weeks ended June 21, per Information Resources Inc., Chicago. At the same time, Northland Cranberries hit $74 million with its national rollout, but the category dropped 6 percent, and some brands as much as 20 percent, per IRI.
“Over the next five years, we expect bigger growth from away-from-home and international than in-home” consumption, Murphy says. Early this year the company formed three strategic marketing units to tackle away-from-home, in-home, and international campaigns. It also set up a brand development group that serves as resource for the three units.
“Promotion becomes the main weapon” to serve disparate audiences, Murphy adds. “We don’t advertise a different brand to a mom or a 17-year-old. We have to [reach them with different] promotional elements while making sure the overall brand message doesn’t seem incongruous to that 17-year-old guy who sees a TV spot that makes him think Ocean Spray is meant for older people.”
A $30 million fall promotion and advertising blitz for 15 new products will be followed by a spring/summer branding campaign that centers on picking the best fruit for juice. This fall the company will run $20 million worth of network TV, “the biggest slug in four months that we’ve ever spent,” Murphy says.
The spring campaign “will look like big-time beverage marketing, not juice drink marketing,” says director of promotions Bob Fallon. “We always come up with the big idea – it’s just leveraging it correctly. We’ll leverage this right through TV, and then leverage the heck out of it with younger tactics for away-from-home and older tactics for in-home.”
Ocean Spray will do on-pack promos for men 18 to 25, like its past under-the-cap tie-ins with the NFL and Sony. Separate radio campaigns will have different prize structures for the two audiences. Reach Marketing, Westport, CT, handles promotions; Arnold Communications, Boston, handles ads.
Some credit vp-marketing Lynn Rotando with Ocean Spray’s marketing renaissance. He headed Ocean Spray’s advertising agency Rotando Partners before joining the company last year. “He’s someone you can have a real marketing dialog with,” says a source close to the company.
The Pepsi problem Like Snapple and Tropicana, Ocean Spray is eager to break into the broader beverage category to establish the same status as Coke and Pepsi in consumers’ minds.
In July Ocean Spray 1/2led suit against its distribution partner, Pepsi-Cola Co., to block parent Pepsico’s purchase of Tropicana. Pepsi and Ocean Spray began a joint venture in 1992, but downgraded that to a distribution agreement in 1995, leaving each company free to develop its own new products and marketing. In fact, Pepsi is testing FruitWorks juice drinks in the Atlantic region and Hawaii, and maintains joint ventures with Starbucks and Lipton.
“We have said all along that we’re fully prepared to perform under our distribution agreement, so it’s hard to understand what merit there is in a lawsuit,” says Pepsi spokesman Larry Jabbonsky. The current distribution agreement runs through 2000.
The Tropicana deal, which closed in August, could eventually edge Ocean Spray off Pepsi trucks, cutting as much as half its single-serve distribution, the part now handled by Pepsi-owned bottlers. If the Pepsi partnership crumbles, Ocean Spray could set up a patchwork of other bottlers and brokers, but its momentum in single-serve products – its main vehicle to reach younger consumers – would slip.
“Ocean Spray didn’t give Pepsi as much control over the brand as Pepsi wanted,” says a source familiar with the deal. “The two sort of stared each other down, and Pepsi decided to go buy its own juice company so it could be in control without having to please a farmers’ co-op.”
Jabbonsky says that doesn’t apply to the Tropicana purchase because Pepsi distanced itself from Ocean Spray marketing when the joint venture was pared down to a contract to distribute Ocean Spray single-serve products.
The relationship may have been contentious, but it expanded Ocean Spray’s single-serve sales to 22 million cases from 1.5 million in 1993. Ocean Spray needs to keep that momentum to be a bigger player in beverages.
Murphy won’t discuss the Pepsi relationship because of the lawsuit, but says Ocean Spray has other distribution initiatives in the works, including expansion in fountain sales in foodservice venues, now a $100 million business for the brand.
The fleet comes in Ocean Spray’s growth historically relied on new products, and this year the money is on Wellfleet Farms, an upscale line of 100 percent juice blends. The line bowed early this summer with flavors such as Key Lime, Granny Smith Apple, and Georgia Peach. More 3/4avors will launch next month, floated by a Nov. 1 national FSI headlined “Tastes so fresh we should sell it by the pound.” The juice will be shelved in produce sections as well as juice aisles, and Ocean Spray will sample in produce sections. Heavy couponing supports.
“Wellfleet could be the key to widening the target audience and being more hip,” says Reach Marketing president Frank Everett. “We could go right after kids because Ocean Spray has got great gatekeeper approval. It’s unbelievable how strong the brand is with focus groups.”
At-home efforts stay aimed at moms and older adults, Ocean Spray’s traditional consumers. Out-of-home efforts target a new audience: young adults, especially men and teens. That poses a brand-image dilemma: Will Ocean Spray’s biggest product benefit – cranberries keep the urinary tract healthy – peg it as an old folks’ drink? Will the health claim that put Ocean Spray on the map become a stigma among new users?
“They need to just get consumers to put their guards down long enough to try the product,” Everett says.
To that end, all promotions include sampling. The second wave of Wellfleet Farms coincides with Ocean Spray’s Feed America Five-Milers, races timed to Thanksgiving in as many as 1/2ve cities this year, up from three last year. Consumers enter the race by donating a bag of groceries – and at least one Ocean Spray product – for a local food shelter. One local grocer is race headquarters. Races may run in Boston, Miami, New York, Phil-adelphia, and a 1/2fth city this year.
The company is “trying to do fewer, bigger events,” Murphy says. It signed a three-year contract with tennis pro Martina Hingas as spokeswoman for grapefruit juice. An ongoing NCAA sponsorship “gives us the opportunity on a local basis to focus on smaller events and member colleges, to do more at the grassroots level,” he says. The company plans to tie in with a local grocer for the Final Four in Tampa, bringing Pop-a-Shot events to supermarket parking lots like it did with H.E.B. in San Antonio this year.
Ocean Spray remains title sponsor of the Cape Cod Baseball League, a collegiate summer league that feeds players into the majors. “It’s a throwback to yesteryear, which is perfect for us to sponsor,” says Fallon. But the company won’t follow a Cape Cod player into the major leagues because “that’s the bailiwick of Gatorade, Coke, Pepsi – we’d get lost in that shuffle,” Fallon says.
A new tie-in with Warren Miller Productions targets college students with sampling at Extreme Skiing 1/2lm screenings, and may include P-O-P at C-stores and gas stations.
The company is eyeing a way to expand its youth soccer efforts. It sponsored the Ocean Spray Cup in Plymouth, MA, where local teams collected labels to enter the tournament. It’s a good way to sample to families, but “it takes a lot of arms and legs” to execute, Fallon says.
Ocean Spray 1/2rst wooed kids with the 1996 video release of Toy Story, giving away Buzz and Woody cups with purchase. It was the brand’s strongest promotion ever, with the highest bump in merchandising support, incremental sales, and profit.
Getting back in grocers’ graces Wellfleet has been Ocean Spray’s fastest rollout, hitting one million cases in three months. Murphy credits grocers’ “pent-up demand.”
“We’ve been a little bit out of the market for a year or so for internal reasons, and it’s been driven home to the trade that Ocean Spray wasn’t driving cranberry [juice sales], and cranberry wasn’t driving the [shelf-stable juice] category,” he says. “The message we got from the trade in late summer was, ‘Where have you been? We need you spending money and bringing us new products.'”
While Ocean Spray tapped marketing budgets to fund operations upgrades, newcomer Northland Cranberries made inroads with its 100 percent cranberry juice. That challenge has been a wakeup call for Ocean Spray to improve its supermarket presence.
“We have to improve our shelf set and get brokers back to basics,” Murphy says. While predominantly broker-sold, Ocean Spray will rely more on its own sales staff as grocer consolidations expand accounts beyond brokers’ territory. In August, the company centralized its 30 customer service reps at headquarters from seven scattered plants. “It’s already starting to work better,” Murphy says.
The company also is testing new fixtures, including an end-aisle display that’s a giant replica of the 64-oz. bottle, and eyeing TV sets and speed bumps in the juice aisle. “Retailers have been extremely open to testing new fixturing ideas,” says vp-retail sales John Emerson. “The future for any brand isn’t to compete in a dying category. If we don’t bring ideas that help the category, we’re going in the wrong direction.”
As for Northland, its president and chief operating of1/2cer, Jerold Kaminski, left in August to return to General Mills as vp-marketing for Betty Crocker. He spent only 14 months at Northland as it set national distribution. Murphy admits, “We created a little vacuum and they bene1/2tted from it. But we’re back competing vigorously, and we’ll see where the chips fall.”
And where the cranberries bounce.
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